Court Rules for Diller in IAC Dispute with Malone
Liberty Media Failed to Prove that InterActiveCorp Chairman Breached Proxy Agreement
By P.J. Bednarski & Brent Felgner -- Broadcasting & Cable, 3/28/2008 3:26:00 PM
A Delaware court ruled for Barry Diller and against John Malone in a legal dispute involving InterActiveCorp that has captivated media circles for weeks because both businessmen have such a fabled history.
The decision was disclosed shortly after the close of the business day Friday.
The court ruled that Liberty Media, controlled by Malone, failed to prove that Diller breached an unusual proxy agreement that lets Diller run IAC and vote Malone's shares even though Malone has more stock. Although both are considered shrewd media businessmen, Malone has a bigger reputation for finding fine points in deals that make them go his way.
Malone and Liberty opposed a Diller proposal that would split IAC into five different publicly traded companies because Malone argued that it would dilute the value of his stock. Diller said unlocking the companies would unleash their value.
Liberty's lawyers were apparently due to speak to Malone about whether to appeal the decision.
Liberty owns about 30% of IAC but keeps 62% control through a class of supervoting shares. Diller has held the right to vote those shares under their proxy agreement. Liberty said Diller should be removed because his proposal to split IAC into five parts violated the proxy agreement.
Earlier in an article in The Wall Street Journal, Malone spoke critically of Diller's way of running the company.
In November, Diller proposed spinning off five of IAC’s companies -- home shopping network HSN; ticketing agency Ticketmaster; mortgage finders LendingTree; time-share brokers Interval; and the rest of IAC, which includes search engine Ask.com and RealEstate.com. Internally they were called the "Spincos."
If the court had ruled against Diller, he would have been subject to removal as chairman and CEO. The court did not render an opinion on a second argument asking if Diller and the IAC directors violated their duty to shareholders by seeking the spinoff.
Diller, a hard-nosed businessman, said earlier that the remarks in the newspaper article in November hurt his feelings, and he was surprised when Malone didn't call to explain. He didn't until about two months later. Diller said recently that Malone's snub hastened his plans to spin off the companies.
Diller, Malone Decision Due
03/16/2008Diller, Malone Reconcile
05/13/2008Malone, Diller Settle Feud Over IAC
05/16/2008
